Banks, organizations help promote financial literacy

By Tim Stuhldreher,
April 26, 2013 at 3:00 AM

What's an annual percentage rate? How do you save for retirement? What's the difference between a stock and a bond? Is it a good idea to put an expensive vacation on your credit card and pay it off over time?

Few Business Journal readers would be baffled by such questions. A large swath of their fellow Americans would be, however: Millions lack the rudiments of financial literacy, researchers say.

In the midstate, many financial institutions are trying to remedy that.

The Swatara Township-based bank offers "Metro Money Sense," a free program for K-12 students, year round, Kochenour said. About 100 trained volunteers from the bank present lessons in school classrooms throughout Metro's market area. Last year, Metro instructors taught more than 250 classes and reached nearly 7,000 young people, she said.

The Pittsburgh-based parent of PNC Bank, PNC Financial Services Group Inc., collaborated with Sesame Workshop, the nonprofit behind Sesame Street, to develop teaching materials geared to children ages 3 to 8, said Christopher Rockey, PNC's vice president of community development banking for Central Pennsylvania.

Investor education coordinator Tina Kotsalos said she and a colleague make presentations throughout the year to age groups ranging from high schoolers to senior citizens. The outreach has won awards, she said.

However, the state makes teaching materials available to schools and has a Web-based forum where educators can network and share ideas and resources, he said.

Some people believe financial education should be left to families, Bowen noted. But not all parents have the background or skills needed to provide good guidance, she said.

Improving financial education will complement other consumer protection efforts, teaching people to ask the right questions and enabling them to take responsibility, she said.

"It should be a part that receives as much attention as science, math and reading," she said.

A guide for the perplexed

In case you had any trouble answering the questions in the first paragraph of this story, here's a cheat sheet:

1. An annual percentage rate is the yearly cost of a loan, expressed as a percentage of the loan, usually including fees.

2. There are many ways to save for retirement: Counselors recommend making full use of employer plans, saving regularly and moving gradually from more to less risky investments over the course of your working life.

3. A stock is a share in a company. A bond is a loan made to a company or a government entity.

4. Rethink your vacation if you will have to carry credit card debt to pay for it. Credit cards usually carry high interest rates, and in general debt should fund long-term purchases and investments, not discretionary short-term consumption.

Cause for concern

Percentage of Americans who say ...

They don't have a budget: 60

Their households save nothing, on average, for retirement: 31

Their households carry more than $2,500 of credit card debt from month to month: 16

They would give themselves an A or B grade for financial knowledge: 60